What is the SaaS Drop Off Rate? 

The SaaS drop-off rate provides data on users who diminish their product engagement, extending beyond users who formally cancel subscriptions. It’s usually observed in conjunction with concepts like onboarding abandonment, early churn, and funnel leakage, demonstrating points where users may focus.

Churn rates in SaaS products may be linked to the ease of the initial user experience:

•   Onboarding
•   User expectations
•   Segmentation quality
•   Value realization length
•   The effectiveness of the lifecycle
•   The perceived value of the product

The duration of the setup process and its impact on a user’s ability to promptly achieve a primary outcome may factor into their decision to continue using the platform.

The drop-off rate varies by SaaS model because different products have various onboarding sophistication, usage frequency, and time-to-value. 

The drop-off rate varies by SaaS model because different products have diverse onboarding sophistication, usage frequency, and time-to-value.

Some typical drop-off points are:

• Account Creation: Over-complicated forms or forced credit card entry.
• Identity Verification: Friction in email or MFA steps.
• The Payment Wall: Lack of localized payment methods or unexpected tax calculations.

Here is a process for discovering exactly where users drop off in your SaaS product:

Step 1: Define the “Happy Path”: Identify the narrower flow of actions that will get the user to their “Aha! Moment”, which is when they first understand the value of the product.

Step 2:  Audit for Technical & Regional Friction
Use analytics to segment drop-offs by geography. If drop-offs are higher in the EU compared to the US, the cause may be a lack of local payment methods (like SEPA or iDEAL) or non-compliance with regional regulations (like GDPR/SCA).

Step 3: Segment the Drop-off: Consider the variables that may affect drop-off and break the data down accordingly. 

Step 4: Analyze the “Why” (Qualitative): Now that the drop-off points have been identified, it is time to find out why users are leaving. Session recordings will highlight the exact moment of confusion, while exit surveys will give you direct user feedback.

Step 5: Prioritize and Experiment: After ranking all the points where users drop off by Impact and Effort, solutions that require the least effort but give the highest impact should be fixed first. Next, A/B test the changes you make (such as removing one of the form fields/stages, or introducing a progress bar) to verify the actual increase in your conversion ​‍​‌‍​‍‌​‍​‌‍​‍‌rate.

Check​‍​‌‍​‍‌​‍​‌‍​‍‌ out these best practices you may follow to lower the drop-off rate of your SaaS customers:

•   Simplify the signup, onboarding, and setup process to reduce friction. Ensure product value is readily apparent to encourage users to achieve initial success.
•   Lifecycle messaging, in-app guidance, and proactive support can be used to encourage users to complete more steps. A guided checklist may affect the time it takes for new users to complete initial key actions.
•   Many SaaS drop-offs aren’t caused by the product itself, but by payment friction. Consider adding localized payments to increase conversion rates and reduce drop-off rates.

Success is usually measured by:

• Retention rate
• Time-to-value
• Activation rate
• Checkout Conversion

Improvements in these metrics may indicate a decrease in users leaving the product before experiencing value.